Volvo will step up investments in India

– Olof Persson

The Volvo Group has been successfully operating in India for 15 years. Its commitment to the Indian market is well reflected in the huge investments made in the country, and the company investments will be stepped up in a bigger way in the coming years.

After taking over as President and CEO of AB Volvo, Mr. Olof Persson made his first visit to India in the first week of November. The visit highlighted Volvo Group’s greater focus on the Indian market to develop it as one of its major hubs for global operations.

The following are excerpts from Mr. Olof Persson’s speech at the media meet in Bangalore:

This is my first trip here as CEO of the Volvo Group. I have been to India a number of times before, the last one was actually two years ago.

My impression so far have been that when you are away from a country for two years, you can see the differences. I see a lot of change, there has been progress in terms of the number of infrastructure projects. I’ve been in Delhi, Pithampur and Bangalore to review our operations. With a lot of speed and agility, things have changed since I was here last time.

Starting off with our strategy. As a lot of things have happened in India, also within the Volvo Group, there have been a lot of changes within last year. One fundamental change is that we have launched a strategy on the truck side which is very much about utilizing and delivering on our full potential. In this strategy, there are a number of areas we are focusing on. Firstly, in terms of profitability, we clearly say we want to be number one or number two in the industry. Secondly, on how we deal and interact with our customers, we really want to strengthen our business relations and partnerships with our customers.

Number three is to capture profitable growth opportunities which is something very dear to my heart. We want to make sure that by working in fast-growing markets, those where we have a good establishment in, but where we also can increase even further, like India, working different with the different brands in our group.

The Volvo Group on the truck side has huge assets in its brands. We have five brands in the group – Volvo, Renault, Mack and UD and through our very successful joint venture we have the Eicher brand in India.

We are also looking at innovative transport solutions. We are a transport solution company delivering solutions in many of the areas – trucks, buses and construction equipment. It’s a lot of focus on fuel efficiency, different kinds of drivelines, electromobility and related areas are involved in innovative and efficient transport solutions.

Being a global organization as we are, it is extremely important that we build a high performance global team. Our colleagues in India play an important role in actually contributing to our global success. This 2013-2015 strategy is the guiding map for the group. It will be translated in activities in the different markets with different products.

Volvo has been present in India for 15 years. We have built our brands in different aspects. For instance, our bus business has really created a segment where we talk about a progressive brand, we contribute into the Indian society to transport people in a very comfortable and progressive fashion. We have built up the Volvo brand in trucks in the premium segment where we have a very strong position. We have over 60 per cent market share in the premium segment. We have also invested heavily in our construction equipment business, from producing road machinery vehicles, we have now added the excavator production and will roll out Indian-produced top brand excavators from our Indian facility.

From a Volvo Group point of view, we are looking at having all our entities represented here – Penta, Services businesses and engineering – the totality of our 4000 people is engaged in a number of different activities in the group. India has over the years also established herself as being a contributor to the rest of the group. Out of the 4,000 people we have in India, almost half is actually working in the global processes, providing services to the rest of the group, something which we have seen accelerating over time. It fulfills the requirement for being a home market in the Volvo Group. For us, in the Volvo Group, India is very much a home market and has developed into that over the years.

We will continue to develop the Volvo brand as a premium product. We do see that there is and will always be a demand for the high premium products in the Indian market. We are also expanding the size and responsibility for the Volvo India hub that means more tasks and responsibilities, both from a service point of view like IT and business services and also in terms of engineering by making sure that we utilize the experience that we have built up over the last 15 years.

We have been investing in India over the years, we are investing today and we will continue to invest going forward. If we look at the coming years, in terms of the totality – trucks, buses and construction equipment – for manufacturing, R&D and product development and facilities, we will be investing in the range of 20 billion rupees. It is important to say that we are committed to India going forward in terms of investment. We are of the belief that if we really want to be an integrated part in the market, then we need to invest.

When we look at the market in India, there is space for a premium product which we have been addressing for 15 years. We also see that there are other segments in the market where we believe the Volvo Group with its technology and experience around the world can serve the Indian customers in a big way. We have decided to launch over time a new value truck in the market. This is not a single truck, it is actually a game-changing offering which we are proposing, where we broaden the product range – haulage, construction and mining. We are developing this and sourcing the product in Asia in order to make sure that we get the product which is fit for the Asian customer in the segment we want to address. It will be addressing markets across APAC – South Asia, South East Asia and other Asian markets.

One thing is to develop the product, at the same time we are also ensuring that we have the production capacity ready. We are going to produce the new product in different parts of Asia – Thailand, Bangalore in India and we are also in discussion in China to develop and produce it. It is a concept of having a product on the truck side addressing the larger market in Asia, by a good production and industrial system around it.

Moving on to our joint venture with Eicher, I must say that I am extremely pleased that the Eicher joint venture has developed. It has been four and a half years of sharing experience, making sure that we combine the knowledge from both organizations – one coming from a history in India for a long time, built itself up in many segments, very strong position in medium and light duty trucks and now coming into heavy duty trucks, together with our 15 years of premium experience in India – this merge together has proven to be very successful and we are now driving forward in order to make sure we continue to develop this very successful joint venture going forward.

I think we are, as the Volvo Group, together with Eicher, extremely well-positioned in the Indian market to take care of what we believe is a good growth market in the long-term. We are also focusing very much on the product side, we are talking about a massive modernization of the Eicher product portfolio, to get the best possible development and best possible product. Eicher going global is an initiative we are focusing to make sure that together that we not only serve the Indian market but also take a look at where the Eicher product fit in different markets around the world, like Africa, Middle East and South East Asia.

Significant investments will be made in the coming years, which are financed within the joint venture. This self-financed investment will be around 18 billion rupees over the coming years, towards all our plans including product development, new engine plant, new bus body plant, new paint shop and new test facility.

We hope you get a feeling that the commitment to India from the Volvo Group with our partner is very strong. We really make sure that we are investing in order to make sure that we are going to be successful. To sum up, I would say that in the 15 years, we have got a very good experience of India. We have learnt and become part of the Indian society and we want to take that role going forward – providing products needed by the Indian society to continue to develop, and also in order to bringing in technology and thinking when it comes to production and merge the two cultures in the Volvo Group in a very good way.

We also want to make sure that we continue to work with our partner Eicher in order to continuously propel the corporation which has been extremely successful, I am very pleased with that. I am also very pleased with the successful development of Volvo.

I think we have an enormously good position to continue to develop with the Indian market in the different directions we take. In the long term, we truly believe that the Indian market is something that will grow and we will be a major part of it, going forward.